Moderating role of millennials' financial literacy on the relationship between risk tolerance and risky investment behavior: evidence from India
International Journal of Social Economics
ISSN: 0306-8293
Article publication date: 18 August 2023
Issue publication date: 4 March 2024
Abstract
Purpose
This study aims to examine the association between risk tolerance and risky investment intention with financial literacy as a moderating variable. The proposed relationship was explored specifically for millennials.
Design/methodology/approach
The questionnaire was divided into three segments to assess millennials' financial literacy, risk tolerance and risky investment intention. This study uses survey data from 402 millennial investors residing in Delhi-NCR region. The authors exploited PLS-SEM for the analysis because the model involved higher-order constructs.
Findings
The findings revealed that financial literacy has a negative impact on risky investment intention. Further, risk tolerance had a positive and significant influence on risky investment intention; however, when financial literacy was added as a moderating variable in this relationship, it had a negative impact on risky investment intention.
Originality/value
Every generation has its quirks, and millennials are no exception. Given their age and sheer number, leading to their dominance in the global workforce, millennials will bring about a generational shift. Awareness of Gen Y's financial literacy and risk behavior enhances their ability to make informed financial decisions, thus proving beneficial not only to them, but also to the whole economy. This will also help policymakers and institutions to introduce financial literacy programs and financial products in alignment with their needs and preferences.
Keywords
Citation
Mohta, A. and Shunmugasundaram, V. (2024), "Moderating role of millennials' financial literacy on the relationship between risk tolerance and risky investment behavior: evidence from India", International Journal of Social Economics, Vol. 51 No. 3, pp. 422-440. https://doi.org/10.1108/IJSE-12-2022-0812
Publisher
:Emerald Publishing Limited
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